Connect to share and comment
United Parcel Service has made a deal to buy TNT Express, Europe’s 2nd-largest express package service.
United Parcel Service Inc. has made a deal to buy TNT Express NV, Europe’s second-largest express delivery service, Bloomberg Businessweek reported. UPS officially announced the deal today.
UPS will purchase TNT for $6.77 billion, the Associated Press reported. Price had been a sticking point during weeks of negotiations, Reuters reported. Last month, Netherlands-based TNT rejected an offer from UPS of 9 euros per share. The deal price amounts to 9.5 euros a share, according to the AP.
Adding TNT to its business more than doubles the UPS presence in the European express delivery market, and steps up the competition against Deutsche Post AG’s DHL, the market leader, Bloomberg Businessweek reported.
According to Bloomberg Businessweek:
UPS controlled 7.7 percent of the European express-parcels market in 2010, compared with TNT’s 9.6 percent, according to Transport Intelligence. Combined, they would be about as large as DHL, which had a 17.6 percent share.
With TNT, 36 percent of UPS sales will come from outside the US, the AP reported. The Atlanta-based company has said it wants 50 percent of its sales to come from international markets five years from now.
“This is a once-in-a-lifetime opportunity,” Andre Mulder, an Amsterdam-based Kepler Capital Markets analyst, told Bloomberg Businessweek on Feb. 19. “Of the four major players globally, TNT is the smallest one, so it’s the last opportunity.”
TNT Express, which was spun off in May from the Dutch state postal service, has 83,000 employees worldwide and 3,000 workers in the Netherlands, Reuters reported. The Dutch postal service, now called PostNL, is the company’s largest shareholder.
Trade union spokesman Reinier Stroo told Reuters on Friday that he doesn’t expect layoffs, even though TNT Express and UPS have some overlap in Europe, including in the freight business.
The TNT deal is the largest acquisition in UPS history, the Financial Times reported. Of the 30 companies UPS has bought since 1999, its 2005 takeover of trucking company Overnite for about $1.3 billion had been its largest so far.
UPS said it will fund the purchase with $3 billion in cash and new debt offerings, the AP reported. The company expects the deal to close in the fall.
More from GlobalPost: Chinese cars, made in Bulgaria